This is the accessible text file for GAO report number GAO-09-638T
entitled 'Financial Literacy and Education Commission: Progress Made in
Fostering Partnerships, but National Strategy Remains Largely
Descriptive Rather Than Strategic' which was released on April 29,
2009.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Testimony:
Before the Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia, Committee on Homeland
Security and Governmental Affairs, U.S. Senate:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 2:30 p.m. EDT:
Wednesday, April 29, 2009:
Financial Literacy and Education Commission:
Progress Made in Fostering Partnerships, but National Strategy Remains
Largely Descriptive Rather Than Strategic:
Statement of Richard J. Hillman, Managing Director:
Financial Markets and Community Investment:
GAO-09-638T:
GAO Highlights:
Highlights of GAO-09-638T, a testimony before the Subcommittee on
Oversight of Government Management, the Federal Workforce, and the
District of Columbia, Committee on Homeland Security and Governmental
Affairs, U.S. Senate.
Why GAO Did This Study:
In 2003, the Financial Literacy and Education Improvement Act created
the Financial Literacy and Education Commission, which comprises 20
federal agencies and which the Department of the Treasury’s (Treasury)
Office of Financial Education coordinates. Responding to a mandate in
the act, GAO assessed the Commission’s effectiveness and in December
2006 recommended that the Commission (1) incorporate additional
elements into its national strategy to help it serve as a true
implementation plan, measure results, and ensure accountability; (2)
expand current efforts to cultivate sustainable partnerships with
states, localities, nonprofits, and private entities; (3) obtain
independent reviewers for the required assessments of overlap in
federal activities and the availability and impact of federal
materials; and (4) measure customer satisfaction with its Web site and
test its usability.
This statement discusses the Commission’s progress in implementing GAO’
s recommendations and key challenges the Commission faces. To address
these objectives, GAO reviewed annual reports, meeting minutes, budget,
and other information from the Commission, Treasury, and related
entities, and interviewed selected representatives.
What GAO Found:
The Financial Literacy and Education Commission has addressed some of
GAO’s recommendations and not others:
* The National Strategy remains largely descriptive. GAO’s 2006 report
noted that the Commission’s National Strategy for Financial Literacy
largely was descriptive rather than strategic, generally did not
include a plan for implementation, and only partially addressed or
defined elements such as performance measures, resource needs, and
roles and responsibilities. Revisions to the strategy made since GAO’s
last report include new “calls to action,” but do not represent a
fundamental shift in approach that incorporates specific
recommendations on roles, funding, and activities. As a result, the
document still does not serve as a true functional strategy.
* Progress has been made in fostering partnerships. The creation of the
National Financial Education Network, which focuses on the state and
local level, and the President’s Advisory Council on Financial
Literacy, which focuses on the private and nonprofit sectors, has been
a positive step toward developing mutually beneficial partnerships that
are sustainable over the long term.
* Independent reviews have been partially initiated. Treasury has
enlisted a volunteer doctoral student to conduct independent reviews on
overlap of federal activities and availability of financial literacy
materials, but the student will not assess the impact of the materials,
as called for in the act. Treasury staff told GAO that they used a
volunteer because they lacked the funds to hire a paid professional.
* Commission has measured customer satisfaction with its Web site, but
has not yet tested usability. Responding to GAO’s recommendation, the
Commission conducted a survey of users of its MyMoney.gov Web site,
although only 144 surveys were completed. The Commission has not
conducted usability testing, a recommended best practice for federal
public Web sites, although it says it is looking into doing so later
this year.
One challenge faced by the Commission has been limited resources. It
has no independent budget and Congress has not provided funds targeted
to the Commission since 2005, although the Commission is able to draw
upon some financial and in-kind resources from its member agencies. For
the past several years, Treasury’s Office of Financial Education has
had about five staff members to conduct its own and Commission
activities. The Commission’s multiagency governance structure offers
benefits—such as the ability to address crosscutting issues—but also is
inherently challenging because it involves coordinating 20 individual
federal agencies, each with its own set of interests, resources, and
constituencies.
View [hyperlink, http://www.gao.gov/products/GAO-09-638T] or key
components. For more information, contact Richard J. Hillman at 202-512-
8678 or hillmanr@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to be here today to provide an update on
the status of recommendations we made in our 2006 report that assessed
the effectiveness of the Financial Literacy and Education Commission
(Commission). The Commission comprises 20 federal agencies and was
created in 2003 by the Financial Literacy and Education Improvement
Act, which charged it with improving financial literacy and education
through the development of a national strategy to promote them.
[Footnote 1] The act mandated that we assess the effectiveness of the
Commission and in December 2006 we issued a report that included
recommendations to the Commission related to its national strategy, Web
site, reviews of federal activities, and development of partnerships.
[Footnote 2]
Today I will discuss (1) the Commission's and the Department of the
Treasury's (Treasury) progress in implementing recommendations that we
made in our 2006 report and (2) challenges the Commission and
Treasury's Office of Financial Education (OFE) face in carrying out
their missions.
To prepare this testimony, we reviewed materials that the Commission
published since our last review, including its annual reports to
Congress, updates and additions to its national strategy, and recent
data on the usage of its Web site and telephone hotline. We also
gathered and reviewed budget and staffing information for OFE and
reviewed contracts and materials related to the office's multimedia
campaigns. We reviewed the annual report and meeting minutes of the
President's Advisory Council on Financial Literacy and the Web site,
agendas, and meeting minutes of the National Financial Education
Network. Finally, we interviewed Treasury staff and representatives of
the President's Advisory Council on Financial Literacy and the National
Financial Education Network. We conducted our work from March 2009
through April 2009 in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Background:
Financial literacy can be described as the ability to make informed
judgments and to take effective actions regarding the current and
future use and management of money. It includes the ability to
understand financial choices, plan for the future, spend wisely, and
manage the challenges associated with life events such as a job loss,
saving for retirement, or paying for a child's education. Several
reports we have issued in the past few years highlight the need for
financial literacy in the United States. For example:
* Last month we reported that the number of private defined benefit
pension plans has declined substantially over the past two decades.
[Footnote 3] With more individuals being asked to take responsibility
for saving for their own retirement, financial skills have become
increasingly important in helping to ensure that retirees can enjoy a
comfortable standard of living.
* Consumers' debt and investment options are increasingly numerous and
complex and consumers have faced difficulty understanding the terms of
mortgages and credit cards. For instance, interviews we conducted with
112 credit cardholders indicated that many failed to understand key
aspects of their cards, including when they would be charged for late
payments or what actions would cause issuers to raise rates.[Footnote
4]
* Based on a survey of more than 1,500 consumers conducted for a 2005
report, we found that consumers understood the basics of credit
reporting but were less aware of other important information, such as
the impact of information contained in credit reports and how various
behaviors impact credit scores.[Footnote 5]
The Financial Literacy Act states that the Commission shall be composed
of the Secretary of the Treasury and the heads of 19 other federal
departments and agencies, and allows the President to appoint up to
five additional members. The act requires the Commission to undertake
certain activities, including (1) developing a national strategy to
promote financial literacy and education for all Americans; (2)
establishing a financial education Web site to provide information
about federal financial literacy education programs and grants; (3)
establishing a toll-free hotline; (4) identifying areas of overlap and
duplication among federal activities and coordinating federal efforts
to implement the national strategy; (5) assessing the availability,
utilization, and impact of federal financial literacy and education
materials; and (6) promoting partnerships among federal, state, and
local governments, nonprofit organizations, and private enterprises.
The act requires that the national strategy be reviewed and modified at
least once a year. It also requires the Secretary of the Treasury to
develop, implement, and pilot a national public service multimedia
campaign to enhance the state of financial literacy and education in
the United States. OFE provides primary support to the Commission and
coordinates its efforts.
National Strategy Is Still Largely Descriptive, although the Commission
Has Addressed Some Other GAO Recommendations:
Our 2006 report assessing the effectiveness of the Commission made
several recommendations. We recommended that the Secretary of the
Treasury, in concert with other agency representatives of the
Commission, (1) incorporate into the national strategy additional
elements to help ensure accountability and more effective results; (2)
consider ways to expand upon current efforts to cultivate sustainable
partnerships with nonprofit and private entities; (3) provide that the
review of duplication and overlap and the evaluation of federal
materials are independent and do not rely solely on agencies' self-
assessments; and (4) conduct usability testing of and measure
satisfaction with the My Money Web site. The Commission has addressed
some of GAO's recommendations and not others.
National Strategy Remains Largely Descriptive Rather Than Strategic:
In 2006, we reported that the Commission's National Strategy for
Financial Literacy was a useful first step in focusing attention on
financial literacy but largely was descriptive rather than strategic.
The strategy was comprehensive to the extent of discussing major issues
and challenges in improving financial literacy and describing financial
literacy initiatives in the government, nonprofit, and private sectors.
However, its recommendations were presented as "calls to action" that
generally did not include a plan for implementation, and the strategy
only partially addressed or defined elements such as performance
measures, resource needs, and roles and responsibilities that help make
national strategies effective.
Our report recommended that the Secretary of the Treasury and other
agency representatives of the Commission incorporate into the national
strategy (1) a concrete definition for financial literacy and
education; (2) clear, specific goals, performance measures, and
benchmarks; (3) the actions needed to accomplish these goals; (4) a
description of the resources required; and (5) a discussion of
appropriate roles and responsibilities for federal agencies and others.
The Commission has implemented the first of these recommendations. In
its April 2007 report to Congress, the Commission provided definitions
for "financial literacy" and "financial education" to help guide the
scope of its work.[Footnote 6] A Treasury official noted that other
organizations, such as the President's Advisory Council on Financial
Literacy, have begun to use these definitions as well.
However, to date the Commission has not incorporated the other elements
we recommended. The Commission updates the strategy annually and
provides the revisions as an addendum to its annual report to Congress.
For the most part, these revisions have consisted of newly developed
"calls to action" and have not represented a fundamental shift in
approach that incorporates specific recommendations on roles, funding,
and activities.
For example, in general the strategy still neither sets clear and
specific goals and subordinate objectives for what it seeks to achieve,
nor does it set priorities or performance measures for assessing
progress. Without performance measures or other evaluation mechanisms,
the strategy lacks a good means of measuring its progress and holding
relevant players accountable. Similarly, while the strategy discusses
in general terms the types of resources that are available from
different sectors, it still does not address fundamental questions
about the level and type of resources that are needed to implement the
national strategy. No cost estimate is provided either for the strategy
as a whole or for specific initiatives or activities. Without a clear
description of resource needs, policymakers lack information helpful in
allocating resources and directing the strategy's implementation. As a
result of these factors, the National Strategy for Financial Literacy,
while beneficial in some regards, still does not serve as a true
functional "strategy"--a plan of action intended to achieve
specifically stated goals.
Progress Has Been Made in Fostering Partnerships:
The Financial Literacy Act charged the Commission with promoting
partnerships among federal agencies, state and local governments,
nonprofit organizations, and private enterprises. In our 2006 report,
we found that it had taken some helpful steps to promote partnerships,
consisting mainly of outreach and publicity efforts, such as conducting
speaking engagements and holding public meetings. To cultivate
sustainable partnerships with nonprofit and private entities, in our
2006 report we recommended that the Commission consider additional ways
that federal agencies could coordinate with private organizations that
have wide networks of resources at the community level and facilitate
the efforts of state and local governments to improve financial
literacy.
National Financial Education Network:
In response to our recommendation, the Commission created in April 2007
the National Financial Education Network to facilitate and advance
financial education at the state and local level. Network members
currently include more than 30 state agencies--such as the Alabama
Securities Commission, Texas Department of Banking, and Wisconsin
Office of Financial Literacy--and five local government agencies, such
as the New York City Department of Consumer Affairs and the Seattle
Housing Authority. More than 15 national organizations also are
members, including the National League of Cities and the North American
Securities Administrators Association.
The network's efforts include the following:
* Development of a Web-based database to share information across
entities. The National Financial Education Network Database for State
and Local Governments [hyperlink, www.flecnationalnetwork.org] was
developed by the National Association of Government Defined
Contribution Administrators in consultation with the network. The site
largely consists of financial literacy materials developed by network
members and is intended for other network members as well as the
general public.
* Conferences to discuss ways of overcoming challenges. The network has
held two in-person meetings. The first such meeting, called the
National Financial Education Network Summit, was held in Seattle,
Washington, in October 2007 and hosted by three Washington-based
organizations. It discussed common challenges facing financial literacy
professionals. OFE hosted the second, which was held in Washington,
D.C., in July 2008, and sought to develop recommendations for
overcoming these challenges. Key topics included promoting financial
education in the workplace, foreclosure prevention and asset
preservation, and the advantages and disadvantages of mandating
financial education in school curricula.
* Conducting conference calls. The network has held quarterly
conference calls, which usually include presentations by members and
updates on the Web site database.
We believe that the Commission has taken a positive step in the
creation of the National Financial Education Network. Our review
indicates that the network has been a useful initial action to foster
communication and collaboration among federal, state, and local
entities that share the common goal of improving financial literacy. In
particular, network representatives with whom we spoke felt that the
network provided an opportunity for members to learn what other states
and localities were doing and share best practices. At the same time,
the National Financial Education Network is relatively new and remains
a rather loosely structured enterprise. As the network progresses
further, it could potentially benefit from a more structured approach.
For example, representatives from two member organizations told us they
believed the network could benefit from a clearer mission statement and
membership criteria.
President's Advisory Council on Financial Literacy:
The President's Advisory Council on Financial Literacy was created by
executive order in January 2008.[Footnote 7] The President and the
Secretary of the Treasury tasked the council to work with the public
and private sector to provide advice on ways to help increase financial
education efforts for youths in school and for adults in the workplace,
increase access to financial services, establish measures of national
financial literacy, conduct research on financial knowledge, and help
strengthen public and private-sector education programs. The council,
which has a 2-year term, currently consists of 16 members who represent
private corporations, nonprofit organizations, faith-based groups,
state agencies, regulatory authorities, and academic institutions.
During its first year, the council created five committees to focus on
key areas of financial literacy: youth, the workplace, outreach,
research, and underserved populations. The council receives some
administrative support from OFE, although a council member and Treasury
staff told us that most of the council's financial and administrative
support has been provided by member organizations.
According to its 2008 annual report, the council implemented or began a
number of initiatives in its first year, including the following:
* Partnered with the USA Freedom Corps (a White House initiative that
seeks to foster a culture of citizenship, service, and responsibility)
to create the President's Council Financial Literacy Corps, which
provides a centralized resource for information on financial literacy
volunteer opportunities;
* Collaborated with the U.S. Small Business Administration to establish
the Office of Entrepreneurship Education, which provides
entrepreneurial information and education, resources, and tools; and:
* Hosted or participated in more than a dozen town hall meetings,
roundtables, conferences and listening sessions, in which one or more
council members met with local community, business, education, and
nonprofit leaders to explore ways to enhance financial literacy in the
community.
In addition, the council proposed recommendations for improving
financial literacy, most of which were aimed at Congress or Treasury,
and some of which were aimed at the private, nonprofit, academic, and
state and local government sectors. The specific recommendations were
organized around five general themes: (1) expanding and improving
financial education for students from kindergarten through
postsecondary education; (2) supporting the role of employers as
providers and conduits of financial education to their employees; (3)
increasing access to financial services for unbanked and underserved
Americans; (4) identifying and promoting a standardized set of skills
and behaviors that a financial education program should teach an
individual; and (5) promoting more awareness of financial literacy and
dedicating more resources to it.[Footnote 8]
The council's term expires in January 2010. Thus far it appears that
the council's efforts have been productive and beneficial, particularly
in helping to focus high-level attention on financial literacy among
leaders in nongovernmental sectors and in facilitating strategic
alliances among federal, private, and nonprofit enterprises.
Commission Partially Initiated Our Recommendations for Independent
Reviews of Federal Activities and Materials:
In 2006, we reported that the Commission had helped coordinate federal
financial literacy efforts by bringing together federal agencies on a
regular basis and centralizing information from multiple agencies
through its Web site and hotline, among other efforts. We also reported
that the Commission asked federal agencies to provide information about
their financial literacy activities in order to meet the Financial
Literacy Act's requirement that the Commission identify and propose
means of eliminating areas of overlap and duplication. Based on the
agencies' responses, the Commission concluded that these efforts had
minimal overlap and duplication. Similarly, to meet a requirement that
it assess the availability, utilization, and impact of federal
financial literacy materials, the Commission asked each agency to
evaluate the effectiveness of its own materials and programs. The
Commission reported that each agency deemed its programs and resources
to be effective and worthy of continuance.
Because these processes in both cases lacked the benefit of assessment
by a disinterested party, we recommended that the Secretary of the
Treasury and the Commission provide for an independent third party to
review duplication and overlap among federal activities and the
availability, utilization, and impact of federal financial literacy
materials. In response to these recommendations, the Commission stated
in its April 2007 and April 2008 reports to Congress that it would
identify an independent party to conduct assessments of both of these
matters, with the first of the independent reviews to be completed in
2009.
In late 2008, Treasury signed a volunteer service agreement with a
doctoral student whose field of study includes program evaluation to
collect, analyze, and report available data on the availability and
duplication of financial education resources that Commission agencies
offered. According to Treasury staff, the final report of the doctoral
candidate, who is doing the project as an unpaid volunteer, is expected
in May 2009. The purpose of the evaluation is to determine the
availability and duplication of program resources provided by
Commission agencies. The evaluation will not address the provision of
the mandate that calls for an assessment of the "impact" of federal
financial literacy materials. Treasury staff told us they are using a
doctoral candidate as a volunteer because they lacked the funds to hire
a paid professional. They also noted that the Commission must depend on
federal agencies to self-report their activities because the Commission
lacks the resources to gather this information independently. As a
result of these factors, the Commission will lack the full benefits of
a professional assessment by a disinterested party, which could help
facilitate efforts to ensure the most efficient and effective use of
federal financial literacy resources.
Commission Measured Customer Satisfaction with Web Site, but Has Not
Yet Tested Its Usability:
The Financial Literacy Act required the Commission to establish and
maintain a Web site to serve as a clearinghouse and provide a
coordinated point of entry for information about federal financial
literacy and education programs, grants, and materials. In October
2004, the Commission launched the My Money Web site [hyperlink,
http://www.MyMoney.gov] in English-and Spanish-language versions. The
site serves largely as a portal that consists of links to financial
literacy and education Web sites that Commission member agencies
maintain. From its inception through February 2009, the site received
approximately 3,258,000 visits.[Footnote 9] Usage has been increasing
somewhat--for example, the site received an average of about 84,000
visits per month for the 6-month period ending February 2009, as
compared with about 69,000 and 61,000 visits per month, respectively,
for the 6-month periods ending March 2007 and September 2006.
In our 2006 report, we noted that the My Money site had not
incorporated certain best practices recommended for federal public Web
sites--such as measuring customer satisfaction and testing for
usability--to ensure that visitors are able to find information
efficiently and effectively. We recommended that the Secretary of the
Treasury and the Commission have the Commission's Web site subcommittee
(1) measure customer satisfaction, using whatever tools deemed
appropriate, such as online surveys, focus groups, and e-mail feedback
forms; and (2) conduct usability testing to measure the quality of
users' experiences with the Commission's Web site.
In its April 2007 and April 2008 reports to Congress, the Commission
said that it would implement these two recommendations by the second
quarter of 2009. From mid-September through mid-December 2008, the
Commission measured customer satisfaction by using a Web-based survey
accessible through a link on MyMoney.gov. The survey included 16
questions, some of which asked about characteristics of the user, such
as age, race, and gender, and some of which asked for the user's
impressions, complaints, and suggestions about the site. Few users
completed the survey--144 surveys were completed for the approximately
240,000 site visits occurring during the 3 months that the survey was
available. Results of the survey are still in the process of being
analyzed and Treasury staff say they will use the findings to help
improve the Web site. Finally, the Commission has not implemented
usability testing but, according to Treasury staff, is looking into
implementing such a test later this year.
Other Communications Initiatives Are In Place:
In addition to a Web site, the Financial Literacy Act also required
that the Commission establish a toll-free telephone number for members
of the public seeking information related to financial literacy. The
Commission launched the hotline (1-888-MyMoney) in October 2004, and it
serves as an order line for a free "tool kit" of publications. Usage of
this hotline has been limited and does not appear to be increasing.
According to data obtained from the General Services Administration
(GSA), which administers the hotline, it received 513 calls in February
2009, as compared with 526 calls in March 2007, the last month for
which we previously requested these data.
As part of the national strategy, the Financial Literacy Act also
required the Secretary of the Treasury to develop, implement, and pilot
a national public service multimedia campaign to enhance financial
literacy in the United States.[Footnote 10] In fiscal year 2005, the
department obligated $750,000 to support this campaign, and chose to
focus on credit literacy among young adults.[Footnote 11] The campaign
was launched in September 2008 and has included television, radio, and
Web banner advertising. It encourages young adults (ages 18-24) to
develop better credit and spending habits and understand the
consequences of developing bad credit. The campaign also features a new
Web site, [hyperlink, http://www.controlyourcredit.gov], where the
audience can play an online game that emphasizes the importance of
maintaining good credit. Elements of the public service announcements
also are available in Spanish. The media have donated advertising time
and space for the announcements through the Advertising Council.
In fiscal year 2008, an explanatory statement by the Chairman of the
House Committee on Appropriations of the House of Representatives
specified that OFE should spend at least $200,000 for activities
combating predatory lending and encouraging the use of mainstream
financial services.[Footnote 12] Some of this funding was used for
personnel and travel costs, according to Treasury staff, but most of it
went toward a $155,000 contract that Treasury signed with a media
agency in September 2008. The agency will conduct a media campaign
through radio, print media, and text messages that is designed to help
Americans understand various financial products and services and avoid
predatory practices or detrimental financial products. The text message
campaign is under way and the other aspects of the campaign are
scheduled to begin in the near future, according to Treasury staff. In
addition, new content has been posted to the MyMoney Web site
[hyperlink, www.mymoney.gov/borrow-smart.shtml] and printed materials
were included with nearly 2 million tax refunds.
The same explanatory statement by the Chairman of the Committee on
Appropriations of the House of Representatives specified in fiscal year
2008 that OFE should spend at least $200,000 toward financial education
efforts aimed at elementary and high schools.[Footnote 13] Treasury
staff told us that the majority of these funds have been spent on
implementation of the National Financial Literacy Challenge, conducted
in partnership with the President's Advisory Council on Financial
Literacy, in which more than 120,000 American high school students took
a 35-question exam on personal finance issues in 2008. The average
score was 56 percent, which the council noted was an indicator that
more rigorous financial education is needed in the schools. Treasury
awarded certificates and medals to students receiving high scores, and
a private foundation offered college scholarships to 32 students who
achieved a perfect score on the exam.
Commission Faces Challenges in Achieving Its Mission:
The Financial Literacy and Education Commission has played a helpful
role by serving as a focal point for federal efforts and making
financial literacy a more prominent issue among the media,
policymakers, and consumers. Key challenges the Commission faces
include its own limited resources and a governance structure that
depends on the commitment and collaboration of 20 individual agencies.
Commission and OFE Have Limited Resources and Staff:
While many federal agencies devote funds to financial literacy and
education, the resources available specifically to the Financial
Literacy and Education Commission and to Treasury's Office of Financial
Education--which provides support to the Commission--have been limited.
Financial Literacy and Education Commission:
The Financial Literacy Act, which created the Commission, authorized
the appropriation of "such sums as may be necessary to carry out its
provisions."[Footnote 14] In addition, the act authorized the
appropriation to the Secretary of the Treasury of $3 million for fiscal
years 2004, 2005, and 2006 to develop, produce and distribute the
multimedia campaign.
However, the Commission has received no direct appropriation since its
inception and Treasury has never requested funds specifically for the
Commission in the President's budget request for the department,
according to Treasury staff. Some of the Commission's activities have
been funded through appropriations provided for Treasury's Departmental
Offices, Salaries, and Expenses appropriation. For example, $1 million
in fiscal year 2005 of the funds appropriated to Treasury was specified
for promoting basic financial literacy and education and was used in
part to develop and implement the Commission's national strategy.
[Footnote 15]
OFE has provided the primary administrative support for the Commission
and devoted a significant portion of its resources to support
Commission activities. As shown in table 1, OFE estimates that in each
fiscal year since 2005, it has devoted from about .75 to 2.5 staff
years (full-time equivalent staff) to support the Commission and
related entities, with staffing at its lowest levels during the 2 most
recent fiscal years.
Table 1: Treasury Department Office of Financial Education Staff
Support to Financial Literacy and Education Commission Activities,
Estimated, Fiscal Years 2005-2009:
Fiscal year: 2005;
Staff years[A]: 2.
Fiscal year: 2006;
Staff years[A]: 2.5.
Fiscal year: 2007;
Staff years[A]: 2.5.
Fiscal year: 2008;
Staff years[A]: 1.5.
Fiscal year: 2009;
Staff years[A]: 0.75.
Source: Treasury OFE.
[A] Full-time equivalent. Includes staff time devoted to the
President's Advisory Council on Financial Literacy and the National
Financial Education Network. Staff years for 2006-2008 include
detailees from other agencies.
[End of table]
Other federal agencies have detailed staff members to the Commission
for short periods--for example, our prior report noted that as of
August 2006, the Federal Deposit Insurance Corporation, GSA, and
Department of Justice had detailed seven staff members to work at OFE
on Commission activities for periods ranging from 2 months to 2 years
each. Member agencies have provided other in-kind staff assistance and
financial resources as well. For example, GSA hosts the My Money Web
site and had estimated that as of August 2006, its staff had devoted
about 4,000 hours to support the site and other Commission activities.
GSA's Federal Citizen Information Center covers the cost of the
Commission's telephone hotline, which we previously reported was about
$28,000 in fiscal year 2006. Most other representatives of the
Commission could not provide us with an estimate of the resources their
agencies had devoted to the Commission, most of which had consisted of
in-kind staff assistance.
Office of Financial Education:
Treasury's Office of Financial Education as a whole has had about five
full-time equivalent staff each year during fiscal years 2005-2009,
which includes the staff time devoted to activities of the Commission.
Through fiscal year 2008, Treasury did not assign OFE as a separate
cost center; rather, its funding was provided within Treasury's
Financial Policies and Programs budget activity, which was also part of
Treasury's Departmental Offices, Salaries, and Expenses appropriation.
The explanatory statements accompanying Treasury's fiscal year 2008
Departmental Offices, Salaries, and Expenses appropriation directed
Treasury to fund OFE at not less than $1.1 million, of which at least
$200,000 each was to be used for activities--as discussed earlier--
focused on (1) elementary and high schools and (2) combating predatory
lending and encouraging the use of mainstream financial
services.[Footnote 16] Treasury began to assign a separate cost center
for OFE in fiscal year 2009, allocating $1.6 million to the office,
according to Treasury staff. The explanatory statement for the fiscal
year 2009 appropriation act specified that OFE should target an
additional $500,000 provided over its assumed budget request toward
efforts aimed at elementary and high schools and combating predatory
lending.[Footnote 17]
Currently, compounding these resource challenges is the number of
vacant leadership positions at key Treasury posts, including Deputy
Assistant Secretary for Financial Education, as well as the Assistant
Secretary for Financial Institutions and the Under Secretary for
Domestic Finance. Filling these positions with individuals committed to
improving our nation's financial literacy will be important.
Commission's Governance Structure Has Benefits but Also Creates
Challenges:
As noted earlier, the Financial Literacy and Education Commission is
composed of a large number of agencies but is housed administratively
in Treasury, has no independent budget, and has no legal authority to
compel member agencies to take any action. This governance structure
has advantages and disadvantages. It has the benefit of bringing
together a large number of players to achieve the common goal of
improving Americans' financial literacy. Achieving results for the
nation increasingly requires that federal agencies work together, and
it would be difficult, if not impossible, for one agency alone to
address the crosscutting issue of financial literacy. The multiagency
structure of the Commission also may facilitate collaboration with
nonfederal entities and, indeed, Congress charged the Commission with
promoting such partnerships.
At the same time, coordinating the efforts of 20 individual federal
agencies is inherently challenging. Each has its own set of interests,
resources, and constituencies. In prior work, we have identified
barriers to coordinating programs and initiatives across the federal
government, including competing missions, concerns about protecting
resources, and a lack of clearly articulated roles and
responsibilities.[Footnote 18] As we noted in our 2006 report, these
barriers may have affected the Commission's efforts to coordinate
federal programs--as well as its ability to streamline federal
financial literacy initiatives to make the best use of scarce
resources.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions you or other Members of the Subcommittee may have.
GAO Contact and Staff Acknowledgments:
For further information about this testimony, please contact Richard J.
Hillman on (202) 512-8678 or at hillmanr@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this statement. Individuals making key
contributions to this testimony include Jason Bromberg (Assistant
Director), William R. Chatlos, Linda Rego, Barbara Roesmann, and
Verginie Tarpinian.
[End of section]
Footnotes:
[1] The Financial Literacy and Education Improvement Act was Title V of
the Fair and Accurate Credit Transactions Act of 2003, Pub. L. No. 108-
159, Title V, 117 Stat. 2003 (2003) (codified at 20 U.S.C. §§ 9701-08).
Hereafter, this statement refers to this act as the "Financial Literacy
Act."
[2] GAO, Financial Literacy and Education Commission: Further Progress
Needed to Ensure an Effective National Strategy, [hyperlink,
http://www.gao.gov/products/GAO-07-100] (Washington, D.C.: Dec. 4,
2006). We also provided an update to this report in a 2007 testimony,
Financial Literacy and Education Commission: Further Progress Needed to
Ensure an Effective National Strategy, [hyperlink,
http://www.gao.gov/products/GAO-07-777T] (Washington, D.C.: Apr. 30,
2007).
[3] GAO, Defined Benefit Pensions: Survey Results of the Nation's
Largest Private Defined Benefit Plan Sponsors, [hyperlink,
http://www.gao.gov/products/GAO-09-291] (Washington, D.C.: Mar. 30,
2009).
[4] GAO, Credit Cards: Increased Complexity in Rates and Fees Heightens
Need for More Effective Disclosures to Consumers, [hyperlink,
http://www.gao.gov/products/GAO-06-929] (Washington, D.C.: Sept. 12,
2006).
[5] GAO, Credit Reporting Literacy: Consumers Understood the Basics but
Could Benefit from Targeted Educational Efforts, [hyperlink,
http://www.gao.gov/products/GAO-05-223] (Washington, D.C.: Mar. 16,
2005).
[6] The Commission defines financial literacy as "the ability to use
knowledge and skills to manage financial resources effectively for a
lifetime of financial well-being" and defines financial education as
"the process by which people improve their understanding of financial
products, services, concepts, so they are empowered to make informed
choices, avoid pitfalls, know where to go for help and take other
actions to improve their present and long-term financial well-being."
[7] Exec. Order No. 13455, 73 Fed. Reg. 4445 (Jan. 22, 2008).
[8] Department of the Treasury, President's Advisory Council on
Financial Literacy: 2008 Annual Report to the President (Washington,
D.C., Jan. 6, 2009).
[9] A "visit" is defined as all the activity of one visitor to a Web
site within a specified period, usually 30 minutes. Because federal
government Web sites are generally prohibited from using "cookies"
(small files stored on a visitor's computer that can contain
identifying information about the visitor), the number of unique
visitors to the My Money Web site cannot be counted. Thus, data on
total number of visits do not represent the number of users who have
visited the Web site because some users may visit the site multiple
times. According to a General Services Administration official, because
unique visitors cannot be counted, the best measure of the Web site's
usage is number of visits.
[10] 20 U.S.C. § 9707.
[11] The Financial Literacy Act authorized to be appropriated $3
million for the development, production, and distribution of the
campaign for fiscal years 2004, 2005, and 2006. 20 U.S.C. § 9707(f).
The conference report accompanying Treasury's fiscal year 2005,
Departmental Offices, Salaries, and Expenses appropriation specified
that $1 million should be used to promote basic financial literacy and
education. H.R. Conf. Rep. No. 108-792, at 1443 (2004). Treasury
obligated $750,000 to support the multimedia campaign conducted as part
of the national strategy.
[12] 153 Cong. Rec H15741, H16048 (Dec. 17, 2007). No conference report
accompanied the Consolidated Appropriations Act, 2008 (2008
Appropriation Act), Pub. L. No. 110-161. However, the Chairman of the
Committee on Appropriations of the House of Representatives had printed
an explanatory statement in the Congressional Record. Section 4 of the
2008 Appropriation Act states that this explanatory statement should be
given the same effect with respect to the allocation of funds and
implementation as if it were a joint explanatory statement of a
committee of conference. While legislative history such as these
statements and other congressional reports generally are not legally
binding, they do provide informational guidance. See Congressional
Research Service, Earmarks Executive Order: Legal Issues (RL34373)
(February 13, 2008). In fiscal year 2009, additional monies were
specified for financial education and combating predatory lending in a
similar explanatory statement accompanying the Omnibus Appropriations
Act, 2009, Pub. L. No. 111-8. See 155 Cong. Rec. H1653, H1988 (Feb. 23,
2009).
[13] See footnote 12.
[14] 20 U.S.C. § 9708.
[15] See footnote 11.
[16] See footnote 12. The explanatory statement states that "(1) not
less than $200,000 is directed to be used to further the office's
outreach and education activities focused on elementary schools and
high schools, and (2) not less than $200,000 is directed to be used for
the development of tailored, targeted materials and dissemination
strategies to protect consumers against predatory lending and encourage
the use of mainstream financial services."
[17] See footnote 12. The explanatory statement directs Treasury to
fund OFE within the Financial Policies and Programs budget activity at
an increased level of $500,000. "The Department is directed to target
this increase toward financial education efforts aimed at elementary
and high schools, as well as efforts aimed at combating predatory
lending."
[18] GAO, Managing for Results: Barriers to Interagency Coordination,
[hyperlink, http://www.gao.gov/products/GAO/GGD-00-106] (Washington,
D.C.: Mar. 29, 2000), and Results-Oriented Government: Practices That
Can Help Enhance and Sustain Collaboration among Federal Agencies,
[hyperlink, http://www.gao.gov/products/GAO-06-15] (Washington, D.C.:
Oct. 21, 2005).
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "E-mail Updates."
Order by Phone:
The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site,
[hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548: